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Monday, 6 March 2017

The GeordieKat looking forward to a big win,but perhaps a bit less excited about the UPC

The AmeriKat has been whiskers down in a trial or two for the past couple of months, but has continued to monitor the political intrigue of Brexit discussions and the fate of the Unified Patent Court (or at least the UK's post-Brexit participation in the UPC). Two camps have emerged from this debate - the pessimists and the optimists. After the roller-coaster ride of 2016 and continuation of white-knuckling through 2017, the AmeriKat is, presently, agnostic as to the UPC. This new approach is helping to temper the impact should anything unanticipated or unwanted happen to increase uncertainty.

Someone who is a touch more optimistic than the AmeriKat is Alan Johnson (Bristows). Alan has been involved in preparations for the UPC for almost 20 years (and the previous false starts). So why, despite everything that has happened, is he still optimistic that the UPC will happen? He explains:

“A triumph of hope over experience” is one of my favourite expressions.

At the start of the football season, hoping that Newcastle United might win the FA Cup (or anything really) is just one personal example. The last time NUFC got anywhere in the FA Cup was 1999 when they lost in the final (2-0 and for the second year in a row in case anyone is interested).

That was the same year I first became interested in what we now know as the UPC. It was also that year that I joined the Brussels-based IP Committee of AmChamEU (the American Chamber of Commerce to the EU) which had years of discussions about the dossier with various Commission officials and the Permanent Representatives (Perm Reps) of successive states holding the EU Presidency.

I remember well having a conversation with a Czech Perm Rep and asking him how he hoped to find a compromise between the bifurcated and non-bifurcated approaches to determining patent disputes. The answer? “We’ll find a way”. That answer typifies the history of the dossier: no matter the difficulties or set-backs (think CJEU Opinion 1/09 for instance) the powers that be (latterly the redoubtable Dr Margot Fröhlinger) have a knack of finding a solution. Which is why I continue to be optimistic that I will not have retired by the time the UPC starts.

Reading the results of a recent WIPR survey, I saw that I was in a minority in thinking that the UPC really will start this year, although it was unclear to me whether the majority were pessimistic about the UPC starting at all, or just on the latest target date. If it is just that there is scepticism that it will be December as opposed to January for instance, that is one thing, but if people think that it will be severely delayed, still less not happen at all, then they are, I believe, just plain wrong. And I say that as someone who was very sceptical about the short term prospects for the UPC following the Brexit referendum and indeed I held that belief almost up to the UK’s 28 November announcement. Why then am I now so confident? It all comes down to seeing the political will and, when needed, creativity.

The Brexit vote left many shell-shocked. Many thought that the UPC was once again dead and buried. Some took a different approach. For instance the very next day, Willem Hoyng wrote a blog for EPLAW on the consequences of Brexit for the UPC, to which Leo Steenbeek (Philips) responded proposing steps which the remaining UPC countries could take to ensure the UPC could continue without the UK with little or no delay at all.

Views on the effect of Opinion 1/09 morphed from it meaning “the UPC must be an EU-only club” to “the CJEU never said that”, meaning one might add that Switzerland was unnecessarily ejected from the club. (I will come back to the effect of CJEU decision 1/09 in a later post.)

As the weeks passed by, the UK was first given a little slack and then asked to make up its mind (and quickly) about what it was going to do. We now know the answer - it will continue the steps towards ratification. As much of a surprise as that was to many (me included), that decision cannot have been taken lightly and without a real intention to follow through.

One, of course, can read the announcement in many ways. Perhaps the UK was being a good European in fulfilling its obligations and allowing the project to go ahead. Perhaps it was thought that the other states would go ahead anyway without too much delay (per Leo Steenbeek’s ideas), so we may as well be a part of it pro tem. Perhaps there was a hope or even expectation that the UK could continue to be a part of the system post-Brexit. But whatever lay behind the thinking, it would be bizarre to think that the UK will not now do its bit and ratify. Everything appears to be on course, and at a best guess, we will see the UK complete its ratification process around Easter, and possibly also deposit its instrument of ratification in early May. (I say possibly also, because the UK might choose to keep control along with Germany of the actual start date for the UPC which is the first day of the fourth month after the last deposit required.)

Given there are now enough non-mandatory countries signed up, and France did so what now seems an eternity ago, that would leave only Germany needing to ratify to start the system. In the last few days we have seen progress in Germany. The relevant legislation to amend the German Patents Act and approve ratification is scheduled for its second and third readings in the Bundestag on Thursday evening (9 March). Friends in Germany suggest it may be expected to be waved through. The German Federal Council, the Bundesrat, has to consent to ratification, as well. As with the UK process, whilst there are still things which could go wrong, this seems no more likely in Germany than in the UK. That being so, the German target date for ratification (spring – not long after Easter) seems realistic. So although Germany will not actually deposit its instrument of ratification until August so as to trigger the December start date, there is no reason to suppose that the all-important Provisional Application Phase cannot start in late May or early June.

Could anything else go wrong? Never say never, but the only other issues could conceivably be practical. There is the judicial appointment process. It can only pick up from where it got to last autumn once the Provisional Application Phase starts, but it should not be incapable of being completed in the timescales we are talking about. More serious perhaps is the Case Management System – IT systems are, after all, notorious for over-running. What a note to end on. Would it not be a delicious irony if a Court dealing with technology were to be delayed by a failure of technology. But any delay would surely only be short. So surely the UPC will start pretty much as planned – and surely Newcastle United will be promoted back to the Premier League – surely..."

So if the UPC opens its doors in December, will it be a triumph of optimism over experience (and politics)? The AmeriKat is not eager to predict the future.

10 comments:

Anonymous
said...

Hopefully, whenever the UPC does start, the very significant effort that is currently being focused on pushing it through despite the obvious upcoming Brexit issue will be immediately refocussed on solving that issue... but somehow I doubt it.

Much like, when Newcastle get promoted to the Premier League I would hope that there is a plan to compete and thrive in that league and the cups but I doubt it.

That people in UK having been involved in the setting up of the UPC do not want to see that investment having been in vain is quite understandable. This is certainly the case for Bristows and similar firms. This can understandably motivate a certain optimism. The same applies to Mr Hoyng, who was not really pleased with the reply he got from Mr Steenbeek in the EPLAW blog. I am of the opinion that Mr Stennbeek’s view is reasonable and correct, in spite of all the rest said in said EPLAW blog. Whatever is happening, the UPC is a court among member states of the EU and finally submitted to the jurisdiction of the CJEU. It might be true that Opinion 1/09 has not said much expressis verbis, but when one reads between the lines, Opinion 1/09 was the death knell of EPLA. Enforcement once UK leaves the EU has also not been solved yet.Does anybody seriously contemplate that the CJEU would accept something like EPLA, or without a proper regulation on enforcement? Envisaging the participation of non EU member states under those conditions is nothing more than wishful thinking. This is a first damper to optimism in the matter.In this respect, I take bets that any decision adverse to a party taken by the local division of the branch of the central division in London will end up at the CJEU. What then? In case of Brexit, UK would still have to accept the jurisdiction of the CJEU, which is politically not straightforward in view of the messages uttered by various UK politicians, starting with PM May. This is a second damper to optimism in the matter.If Brexit comes, which is rather certain, then the UPC would be part of the general bargaining between UK and the rest of the EU member states. I doubt that this is a perspective which will encourage patent proprietors to have their patents going to be scrutinised by the UPC. Uncertainty is anything but liked by industry and investors. So why should they go along with a system in which they do not know what their patent will undergo in case of litigation? It is thus to be expected that there will be a massive opt out until the situation has clarified. This is to me a third damper to optimism in the matter. It goes much further than looking for practical solutions. It not only needs a political will, but as well a legal framework to proceed with UPC once UK has left the EU. Simply saying lets ratify and see what comes out later is neither reasonable nor serious. To put a finishing touch: has anybody of the proponents of the UPC ever looked at the proportion of applications for an EPC patent from countries member of the EU, with or without UK? If one is optimistic it is about a third. If one is pessimistic it is less than a third. As the number of patents granted are more or less in proportion to the applications filed, which countries will mainly benefit from the UPC? Certainly not the EU member states, with or without UK. And from those applications how many stem from the SMEs? Claiming that UP and UPC is beneficial to European industry and SMEs is nothing more than a fallacy. This bring me down to the next question: who needs a patent in 25 countries at once? One should look at the number of validations of granted EPC patents before claiming that the UPC is an absolute necessity for European industry, and especially the SMEs. Lobbying for the UP and the UPC was quite remarkable, but lobbying is never innocent. I am neither optimistic nor pessimistic about the UPC, but there are so many problems lurking, that, whatever happens, I just hope that Europe will not one day regret having embarked on the UPC boat.

Who are the numpties that are going to put their employer's/client's important eggs in one unitary basket? Own up. We need to know who you are so we can never employ you in the pharmaceutical industry.

Anon at 6 March, 18:31 has a very good point too. Whilst it has often been said that the pharma industry will be a user / beneficiary of the UP system, I am not so sure. Who would want to put their prize possessions into a very uncertain and likely unstable system? Saving money on renewal fees (and potentially reducing litigation costs) is all very well, but the "old" system still looks better (more secure) on balance if you can afford it... which big pharma can.

I have to say that I have been utterly amazed by the glib way in which many proponents of the UPC have dismissed / minimised concerns raised regarding some of the detrimental effects of the UP system. Observer has pointed to two of the most serious of these, namely non-compliance with EU law and the (more than merely plausible!) problems enforcing UPC judgements in the UK. I have never seen any convincing arguments from a UPC proponent that explain why we should not be seriously concerned about these issues. But this is just the tip of the iceberg. Many more issues lie beneath.

Let me just raise one further issue now. Retroactivity. This is a huge problem with the UPCA. This is because that Agreement purports to apply new law to existing EP applications and patents. There are no transitional provisions whatsoever.

Now you might ask what I mean by "new" law. Really this relates to the provisions for indirect infringement, as well as the exceptions from infringement. In monoist countries (e.g. Germany and France), where ratification of the UPCA directly imports the provisions of that Agreement into national law, this could lead to quite a shock. This is because there will be instances where acts that did not infringe a patent one day will (with no change other than the UPCA coming into force) infringe it the next. Worse still, due to the absence of transitional provisions, previous acts could retroactively be held to be infringing.

This situation is of course absurd (and, moreover, contrary to general principles of EU law). But it does not appear to have bothered the legislators at all. However, I wonder if the legislators in France and Germany realise that (for all but national patents) they are just about to relinquish those nice, broad "Bolar" provisions that they took such care to draft? After all, the Bolar in the UPCA (which will take precedence over national law) is very narrow indeed.

As the pudding of proof agreed with my point, it is only courteous for me to return the complement. The narrowness of the Bolar provision provided by UPCA, which refers directly to the Directive demonstrates a serious lack of foresight from those who drafted this legislation. A complete failure to learn from the experience of others is pretty dumb. The Bolar provision has a clear, direct, effect on the European pharmaceutical industry and the benefit of broader provisions has been demonstrated to be economically beneficial. So much so that the UK updated its rules.

The argument against pharma using the unitary paten option may considered to be tempered by this narrow Bolar provision giving them improved protection, but I seriously doubt this to be an important factor. The other issues mentioned above are those that will be the determining factors against the unitary route.

The wording of the Directive appears set in stone within the UPCA. What if the EU decides to broaden the allowable acts, will this agreement be updated automatically?

Finally, why would the UK wish to remain within this patent union once it has left the EU, with so many important provisions being under the control of the EU and especially when such provisions have already been rejected?

One of the most particular things about the UPC is that the European Union needs the court which would be able to handle a bunch of litigations in a several national EU jurisdictions. Instead, the EU will receive with the UPC something quite different, i.e. a EU-wide court with an exclusive EU-wide jurisdiction in the long term.

So, it resembles the situation where you go to the shop to by a car but return with a bought train.

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